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Articles 1 - 5 of 5
Full-Text Articles in Business
Bundled Earnings Guidance And Analysts' Forecast Revisions, Charles Hsu, Rencheng Wang
Bundled Earnings Guidance And Analysts' Forecast Revisions, Charles Hsu, Rencheng Wang
Research Collection School Of Accountancy
Bundling managerial earnings guidance with quarterly earnings announcements (EAs) has become an increasingly common practice. This study investigates the impact of bundled guidance on analysts' forecast revisions. Our findings indicate that analysts respond more to bundled guidance than non-bundled guidance. This effect increases with analysts' time pressure and cognitive constraints around the EA. Analysts' revisions also incorporate more of the bundled management guidance when accompanied by additional information, such as conference calls. We further find that analysts revise their forecasts more quickly following bundled guidance than non-bundled guidance. Together, these findings are consistent with the notion that analysts place more …
Data Analytics And Audit Quality, Ru Gao, Sterling Huang, Rencheng Wang
Data Analytics And Audit Quality, Ru Gao, Sterling Huang, Rencheng Wang
Research Collection School Of Accountancy
We examine the impact of data analytics on audit quality. Using hand-collected information on data analytics skills of employees of audit firms, we find that human capital investment in data analytics improves audit quality. The analytics capability of both frontline and back-office employees contributes to audit quality. The effect is more pronounced for audit clients with complex business operations, for clients with complicated accounting estimates, and for clients that are more digitalized. Taken together, our findings suggest that an audit office’s analytics capability represents an important office attribute that can affect audit quality.
Non-Gaap Earnings And Stock Price Crash Risk, Charles Hsu, Rencheng Wang, Benjamin C. Whipple
Non-Gaap Earnings And Stock Price Crash Risk, Charles Hsu, Rencheng Wang, Benjamin C. Whipple
Research Collection School Of Accountancy
We investigate whether non-GAAP earnings disclosures increase stock price crash risk. Consistent with non-GAAP disclosures allowing managers to inflate investors’ perceptions about firm performance, our results indicate that income increasing non-GAAP reporting increases crash risk. We also find that managers can use non-GAAP reporting as a substitute for earnings management to withhold bad news from investors (the traditional explanation for crashes). Finally, we find a positive association between non-GAAP reporting and the likelihood of subsequent events that can trigger a crash. Overall, our evidence is consistent with some non-GAAP disclosures exposing investors to risks of large and sudden price declines.
Labor Market Mobility And Expectation Management: Evidence From Enforceability Of Noncompete Provisions, Michael Tang, Rencheng Wang, Yi Zhou
Labor Market Mobility And Expectation Management: Evidence From Enforceability Of Noncompete Provisions, Michael Tang, Rencheng Wang, Yi Zhou
Research Collection School Of Accountancy
This study examines how managers' use of expectation management is affected by their labor market mobility, which we measure by the enforceability of noncompete provisions in their employment contracts. Exploiting quasinatural experiments, our difference-in-differences analyses provide new causal insights to the growing literature on how managers' career concerns affect their disclosure choices. Consistent with a less mobile labor market imposing more pressure on managers to achieve earnings expectations, we predict and find that managers in US states that tightened enforcement of noncompete provisions are more likely to manage analyst expectations downward. We also find that downward expectation management is used …
Analyst Teams, Bingxu Fang, Ole-Kristian Hope
Analyst Teams, Bingxu Fang, Ole-Kristian Hope
Research Collection School Of Accountancy
This paper examines the impact of teamwork on sell-side analysts’ performance. Using a hand-collected sample of over 50,000 analyst research reports, we find that analyst teams issue more than 70% of annual earnings forecasts. In contrast, most prior research implicitly assumes that forecasts are issued by individual analysts. We document that analyst teams generate more accurate earnings forecasts than individual analysts and that the stock market reacts more strongly to forecast revisions issued by teams. Analyst teams also cover more firms, issue earnings forecasts more frequently, and issue less stale forecasts. Analysts working in teams are more likely to be …